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VOLUNTARY PARTNERSHIP AGREEMENT: TIRWG REPORT

TIMBER INDUSTRY RE-STRUCTURING WORKING GROUP (TIRWG), JUNE, 2008 1

VOLUNTARY PARTNERSHIP AGREEMENT

TIMBER INDUSTRY RESTRUCTURING GROUP

FINAL REPORT

MEMBERS

A. A. Oteng-Amoako

Chief Wood Technologist & Scientist, FORIG, Chairman

Francis K. Odoom

M. D., Arbor Nova Forestry Consultant

Gene Birikorang

Private Forestry Consultant

Kweku Pra Ghartey

Commissioner FC and Timber Industry Expert

O. K. Boateng Poku

President GTA

Ghassan Bitar

Timber Industrialist

Roger Cardoso

TIDD

John H. S. Kwofie

SMFEs

Francis Yaw Opoku

FC - Secretary

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VOLUNTARY PARTNERSHIP AGREEMENT

TIMBER INDUSTRY RESTRUCTURING WORKING GROUP

FINAL REPORT

TABLE OF CONTENTS

ACRONYMS 4

EXECUTIVE SUMMARY 6

Current State of the Industry 7

The Challenges 8

Interventions to Restructure the Industry 9

Recommendations 10

. 1.0 INTRODUCTION 13

1.1 Background 13

1.2 Approach, Methodology and Objective 13

2.0 THE CURRENT STATE AND CHALENGES IN GHANA’S TIMBER

INDUSTRY 15

2.1 Inadequate and Unsustainable Raw Material Supply 15

2.2 Obsolete Processing Technology 16

2.3 Distorted Market 18

2.4 Policies and Legislation 19

2.5 Inadequate Infrastructure and Logistics 19

2.6 Weak Trade Associations 19

2.7 Inadequate Research Funding 19

2.8 Illegal Chainsaw Harvesting 20

3.0 STRATEGIC INTERVENTIONS FOR RESTRUCTURING THE INDUSTRY 20

3.1 Supply of Sustainable Raw Materials 20

3.2 Legal Wood Material Supply to the Domestic Market 25

3.3 Technology & Capacity building for Downstream Processing 26

3.4 Marketing in Legal Timber and Wood Products 29

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3.5 Enforcement of Policies, Legislations and Fiscal Reforms 32

3.6 Capacity Building and Infrastructure Development 32

3.7 Empowerment of Trade Associations 33

3.8 Promotion of Demand-Driven Research and Development 34

3.9 Alternative Livelihood 34

4.0 THE EFFECT OF RESTRUCTURING IN REDUCING ILLEGAL

CHAINSAW HARVESTING AND TRADE 35

5.0 CONCLUSIONS AND RECOMMENDATIONS 37

6.0 BIBLIOGRAPHY 41

7.0 APPENDICES 44

Appendix 1: Questionnaire on the State of Ghana’s Wood industry 44

Appendix 2: Budget for Selected Development Interventions 45

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ACRONYMS

AAC Annual Allowable Cut

CoC Chain of Custody

CSIR Council for Scientific and Industrial Research

CSR Cooperate Social Responsibility

DBH Diameter at Breast Height

ECOWAS Economic Commission of West African States

EDIF Export Development Investment Fund

EMPRETTEC Empresas Technologicas

EU European Union

FC Forestry Commission

FDMP Forest Development Master Plan

FLEGT Forest Law Enforcement Governance and Trade

FMP Forest Management Planning

FORIG Forestry Research Institute of Ghana

FSD Forest Services Division

GDP Gross Domestic Product

GFTN Global Forest Trade Network

GIA Ghana Institute of Architects

GIF Ghana Institute of Foresters

GIFEX Ghana International Furniture and Woodworking Industry

Exhibition

GIPC Ghana Investment Promotion Centre

GOG Government of Ghana

GPHA Ghana Ports and Harbours Authority

GRCC Ghana Grading Rules Consultative Council

GREDA Ghana Real Estate Developers Association

GTA Ghana Timber Association

GTMO Ghana Timber Millers’ Organisation

ISO International Standards Organisation

ITTO International Tropical Timber Organisation

IUCN International Union for Conservation of Nature

KWC Kumasi Wood Cluster

LI Legislative Instrument

LKS Lesser-Known Species

LUS Lesser-Used Species

MES, Ministry of Environment and Science

MFEP Ministry of Finance and Economic Planning

MLFM Ministry of Lands, Forestry and Mines

NBSSI National Board for Small Scale Industries

NDPC National Development Planning Commission

NREG Natural Resource and Environment Governance

NTFP Non Timber Forest Products

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OFR Outside Forest Reserves

R&D Research and Development

RMSC Resource Management Support Centre

SME Small and Medium Enterprises

SMFE Small and Medium Forest Enterprises

SRA Social Responsibility Agreement

TIDD Timber Industry Development Division

TIRWG Timber Industry Restructuring Working Group

TOR Terms of Reference

TRF Timber Rights Fee

TUC Timber Utilisation Contract

TUS Technological Unknown Species

TVA Timber Validation Agency

TVE Timber Validation Entity

VAT Value Added Tax

VPA Voluntary Partnership Agreement

WITC Wood Industries Training Centre

WTS Wood Tracking System

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TIMBER INDUSTRY RESTRUCTURING GROUP

EXECUTIVE SUMMARY

Illegal chainsaw logging and trade in illegal timber have taken an unprecedented level since the

onset of Forest Development Master Plan of 1995 which, among others, sought to curb this illegal

practice. It is currently estimated that about 50% or 1.5 m3 of annual harvested timber of 3

million m3 is from illegal source compared to the prescribed annual allowable cut of two million

m3. The high volume of illegal timber extracted from the forests poses a major challenge to

sustainability of Ghana’s forest resources and a major concern to our major trade partners of the

European Union.

Consequently in 2006, Ghana started a negotiation process of a Voluntary Partnership Agreement

(VPA) with EU which involves a licensing scheme to ensure that only legal timber and wood

products are traded and exported into the EU countries. The key negotiating elements agreed

under the VPA were: (a) definition of legal timber, (b) a system of verification of legality,

including a proposed licensing scheme, (c) a Chain of Custody (CoC) called wood tracking

system (WTS), (d) an independent monitoring of the legality assurance system and (e) mitigation

of possible impacts of the VPA on the timber industry which will have to be restructured in order

to address the impact.

The Timber Industry Restructuring Working Group (TIRWG) was one of the five Committees

tasked by the VPA Secretariat to look at the five negotiating elements and come out with

recommendations on the industry related issues to allow GOG negotiate with EU.

Terms of Reference (TOR)

The Terms of Reference (TOR) for the TIRWG was to make recommendations for restructuring

the timber industry towards minimizing illegal chainsaw log harvesting and trade in illegal timber

in line with international best practices. Additionally the group was to determine the impacts

arising from the restructuring and measures to address them. Finally the group was to advise the

government on the negotiation on industry restructuring.

In addressing the TOR, the group reviewed the development objective in relation to the five

specific objectives of FDMP and arrived at the following three major specific objectives to guide

the group’s work.

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i. Sustaining raw material supply to the wood industry to meet the domestic and

international demand;

ii. Re-quipping the wood processing industry with efficient machinery for downstream

processing primary breakdown of small diameter logs, utilization of wood residues

and introduction of innovative wood raw materials; and

iii. Improving marketing efficiency of timber and wood products and harmonizing

distorted prices of lumber between domestic and export markets.

Additionally, the following relevant specific objectives were also formulated.

i. Identifying, formulating, implementing and enforcing policies and fiscal reforms that

enhance positive development in the wood industry to minimize operations of illegal

chainsaw loggers and trade in illegal timber;

ii. Building capacity of the Forestry Commission and its associated institutions for

improved delivery of their missions;

iii. Equipping and funding research institutions to undertake demand-driven research

and development;

iv. Empowering relevant primary stakeholders, especially the SMEs, to be more efficient

and accountable and create wealth for their respective members; and

v. Identifying alternate livelihood for affected groups of people including illegal

chainsaw operators likely to be victims of the restructured industry.

The Current State of the Industry

A review of the current state of the timber industry was undertaken through literature search and

administration of a short interactive interview based on questionnaire in Appendix 1. Ten mills

each were selected in Kumasi and Takoradi. The following characteristics describe the current

state of the wood industry:

About 3 million m3 of annual raw material, currently used by the formal and informal sectors of

the industry, is not only inadequate but also unsustainable. About 1.5 million m3 of illegal round

wood equivalent of sawn timber is supplied to the domestic market at a price of 20 to 40%

cheaper than the export price. Most processing mills are ill-equipped with old inefficient

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machines capable of primary processing of large diameter logs. Facilities for slicing and rotary

veneer, and ply milling are limited. The domestic informal processing sector lacks capital and

technical capacity. They have limited access to short term finance and have little knowledge

about enterprise management and planning. Most mills are not equipped for down stream

processing and wood products in the informal sector are invariably of poor quality. Marketing

system is mostly export oriented and the domestic market is generally neglected. There is a high

unsatisfied demand for lumber on the domestic market for building construction and furniture

manufacture.

The Forestry Commission and its institutions are inadequately equipped. Poor capacity and

Limited infrastructure, low capacity and other logistics have hindered FC from implementing

directives and enforcing existing policies effectively. A large number of the firms and their trade

associations governing them are weak and are unable to seek the welfare of their members. Many

firms are unable to meet technical and marketing challenges, and associated business practices.

The research institutions, though endowed with well-qualified professionals, are poorly funded to

undertake any meaningful demand-driven research to address interventions in the industry. Illegal

chainsaw loggers, have over the years, had a field day and trade in illegal chainsaw timber in the

domestic market is openly displayed due to un-enforced, weakly enforced or inefficient policies,

poor fiscal reforms, lack of political commitment and ineffective monitoring..

The Challenges

Ghana’s timber industry faces major challenges that will have to be addressed in a VPA

restructured wood industry. First, there is a need to ensure that timber supply to the industry is

sustainable, legal and meets domestic and export demand. The old inefficient processing mills

must give way to precision and energy efficient machines for downstream processing. The market

should be restructured for efficiency that will address the distorted price of timber in the domestic

and export markets, and reduce trade in illegal timber. Some policies will have to be reviewed

and enforced while new ones will have to be formulated and implemented. There will be a need

for comprehensive fiscal reforms in the restructured industry that will reduce activities of illegal

chainsaw timber operators. The capacity and infrastructure of FC and its institutions will be

improved to enhance effectiveness and to increase output while adequate funding for research and

development will be the order of the day. An effective and empowered trade association, in a

restructured industry, will be needed to champion the interests of the SMEs and assist in

sustainable supply of legal timber to the industry. Alternative livelihood for workers in the

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industry, including illegal chainsaw timber operators, likely to be displaced from a restructured

industry, is a must and should be given the maximum importance that it deserves.

Interventions for Restructuring the Industry

Development interventions needed to restructure the timber industry of Ghana will include but

not limited to sustainable wood supply; re-equipping existing mills for downstream processing

and normalization of distorted and under-developed market. These interventions will address the

vision of a restructured industry seeking to: facilitate an effective balance between the timber

resource base and industry processing capacity; improved and modernized milling efficiency and

increased value added processing; increased processing capacity for plantation timber and

innovative wood material from non-timber forest products including bamboo wood and wood

residues.

Sustainable Supply of Raw Materials: The Voluntary Partnership Agreement (VPA), as an

instrument to tackle illegal timber and export of wood products, will result in strict adherence to

the current AAC of two million cubic meters which will be inadequate for the industry. Therefore

a sustained source of wood raw material should be found through improved natural regeneration;

ensuring efficient processing and utilization of wood residue; increasing use of Lesser-Used

Species (LUS), Lesser-Known Species (LKS) and Technological Unknown Species (TUS) to

justify possible future increase in AAC allocation; increasing use of non-traditional wood species

like rubber wood, coconut wood and bamboo wood; increasing plantation development of fast

growing timber trees; importation of logs and increased use of plastic, steel, wood-plastic and

wood-steel furniture combinations. Teak log export has to be curtailed to provide more raw

materials for downstream processing. Total yield removal will have to be enforced making it

mandatory for all LUS in a given yield to be removed by concessionaires for supply to the

domestic market.

Retooling: The restructured timber industry, under the VPA, is expected to provide financial and

technical assistance to local entrepreneurs to enable them to contribute to greater export of value-

added wood products through downstream processing, production of quality wood products and

promote greater intra-sector and inter-sector linkages. The distressed SME mills will be re-

equipped with energy efficient machines for improved efficiency in production of quality and

standardized wood products. The capacity of SMEs in innovative processing technology and

business skills will be improved. Effective support services and global strategic alliance with

international players will be sought and a market-oriented technological research and

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development (R&D) will be promoted. The informal enterprises of carpenters and craftsmen will

be assisted with simple power tools to increase their efficiency. In addition to energy efficient

processing machines, an alternative source of cheaper energy generation from wood residue or

solar energy should be sought to support industrial cluster of the micro carpenters and small

enterprises at the Nkenkasie Wood Village.

Marketing and Trade: Trade in secondary and more importantly tertiary products will have to

be enhanced in a restructured wood industry under the VPA. The government as the largest

single consumer for illegal chain sawn lumber will be restricted by ensuring that Public

Procurement Board prohibits use of illegal chainsaw timber for all projects funded by the

government. The FC will enforce all existing laws which will also restrict domestic use of illegal

chain sawn lumber. There will be vigorous promotion of LUS and LKS, and even TUS, for

domestic and export market. FC will lead in a marketing strategy for promotion of minor species

whereby FC through TIDD will assist the trade associations to secure huge export orders and

collate production from the SMEs for export. The use of minor species (LUS and LKS) as

substitutes for the well-known premium and other major commercial species will be vigorously

pursued. Trade information on new products, processing technologies, exhibitions, seminars and

workshops will be promoted and trade associations empowered to be more effective.

Other interventions: Co-financing of joint research programmes between industries will be

promoted and FORIG’s research programme should be demand-driven. The restructured wood

industry will result in possible redundancy of chainsaw operators and other workers from the

processing industry which has gone downstream. These displaced persons will be given

alternative livelihood training and will be assisted to start their own business as plantation

farmers, tour guides, forest guards etc while, some of them will be trained to acquire skills in

downstream processing to work in the restructured industry.

Recommendations

No meaningful result can come out of any developmental agenda unless policies and legislations

governing such developmental interventions are properly and effectively implemented. It is

therefore recommended that a special task force of relevant stakeholders to implement all policies

and the under mentioned interventions needed to ensure effective restructuring of the timber

industry. The recommended interventions in asterisks should be formulated for funding by the

EU.

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A. Sustainability of Legal Raw Material

• * Sustainability of future legal raw material supply through an expansive plantations

development programme by the private and public sector taking into account market

requirements and environmental considerations in the selection of species. EU support 20

million Euros; GOG 1 million GHC.

• * Wood quality assessment, product development and promotion of LUS, LKS and TUS

• * Development of non-timber forest products such as bamboo, rubber and coconut wood as a

means of complementing and sustaining future raw material supply to the domestic and

international markets including inventory of bamboo and NTFP. EU support 3 million

Euros; GOG1 million GHC

• Public Procurement Policy to prohibit use of illegal chainsaw timber on the domestic market

for all government contracts. This will be done in consideration with other policy

interventions under the domestic market recommendations.

• * Measures and incentives to involve fringe forest communities in the management and

protection of the forest and timber resource. EU support 2 million Euros; GOG 0.5 million

GHC

B. Import of Raw Material

• Arrangement with trade missions to promote buyer-seller networking in African timber

producing countries to encourage growth in imports of logs, sawn timber and veneer for value

added processing in Ghana. Some companies are already bringing in sawn timber and sliced

veneers and should be encouraged.

C. Downstream Processing

• * Re-equip selected SMEs for downstream processing and production of quality wood

products using LUS and innovative wood materials including bamboo, rubber and coconut

wood. Assistance will be in the form of soft loans. EU support 290 million Euros.

• * Acquisition of common facility machines and technical services to Kumasi Wood Village

cluster of micro and small wood entrepreneurs and industries. EU support 2.5 million

Euros; GOG 0.7 million GHC

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D. Market and Trade

• Improved marketing intelligence, particularly for the domestic market for competitive price

and normalizing selling price between domestic and export market.

• * Accessibility to international markets for tertiary products with particular emphasis on

innovative product quality, standardization and promotion through international fairs. EU

support 3.5 million Euros; GOG 0.95 million GHC

E. Capacity building

• * Capacity building of FC and associated institutions (TIDD, FSD, and WITC) to strengthen

their regulatory role to be more accountable while improving transparency in award and

auctioning of the timber resource and ensuring that policies and fiscal reforms are fully and

strictly complied with. This will include inter-sectoral links to law enforcement agencies and

the judiciary. EU support 6.5 million Euros; GOG 1.85 million GHC

E. Trade Associations

• * Empowering trade associations to be more efficient and accountable including promoting

their participation in the protection of the forest resources and acquisition of raw materials.

EU support 3 million Euros; GOG 0.35 million GHC

F. Research and Development

• * Adequate funding for research institutions to undertake demand driven research, promote

and disseminate research findings on LUS, LKS, and innovative raw material to the industry

and other stakeholders.. EU support 2.5 million Euros; GOG 0.95 million GHC

G. Alternative Livelihood

• * Training in sustainable alternative livelihood for displaced chainsaw operators and other

workers in the industry as a result of wood industry reforms under the VPA. EU support 6.0

million Euros; GOG 1.0 million GHC

H. Professional Associations

• * Developing capacity in civil society and the private sector in particular Ghana Institute of

Foresters, to undertake independent monitoring of forest industry. EU support 1 million

Euros; GOG 0.15 million GHC

Details and costs of these interventions in the order of priority are provided in Appendix 2.

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TIMBER INDUSTRY RESTRUCTURING WORKING GROUP

FINAL REPORT

1.0 INTRODUCTION

1.1 Background

In 2006, Ghana formalized a VPA negotiation process with the EU. The principal aim of Ghana’s

future VPA with the EU will seek to engender support for its governance reforms and strengthen

enforcement activities in the country. It will also seek to establish a licensing scheme to ensure

that only legal timber products are exported into the EU, and to position Ghana to respond to

changing international market requirements for timber. The domestic market has long been

dependent on illegal timber and the VPA intervention will impact negatively on the supply of

wood to the domestic market. There will be the need to restructure the timber industry to ensure

sustainable and legal supply of timber to both the domestic and export markets.

Key negotiating elements being considered under the VPA are

(a) Definition of legal timber,

(b) A system of verification of legality, including a proposed licensing scheme,

(c) A Chain of Custody (wood tracking system),

(d) An independent monitoring of the legality assurance system, and

(e) Mitigation of possible impacts of the VPA, including options for legal timber supply on the

domestic market and restructuring of the timber industry.

The group’s Terms of Reference will focus on recommendations for restructuring of timber

industry towards minimizing illegal trade in timber product and promoting legal trade in line with

international best practices.

1.2 Approach, Methodology and Objectives

The Timber Industry Re-structuring Working Group (TIRWG) reviewed the TOR in relation to

the following objectives of FDMP of 1996 to arrive at its objectives:

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i. Management and enhancement of Ghana’s permanent estate of forest and wildlife

resources;

ii. Promotion of viable and efficient forest based industries, particularly in secondary

and tertiary processing;

iii. Promotion of public awareness and involvement of rural people in forestry and

wildlife conservation;

iv. Promotion of research-based and technology led forestry and wildlife management,

utilization and development; and

v. Development of effective capacity and capability at national, regional, and district

levels of sustainable forest and wildlife management.

The following inferences in relation to the working group’s terms of reference were derived as

the specific objectives for restructuring Ghana’s timber industry.

1.2.1 Specific Objectives

(i) Sustaining raw material supply including minor timber species of LUS, LKS TUS, wood

residues, branch wood, buttress wood and bamboo wood to meet the domestic and export

markets;

(ii) Re-equipping the wood processing industry with innovative and energy-efficient machines

for downstream processing;

(iii) Improving marketing efficiency of timber and wood products and harmonizing distorted

price between domestic and export markets;

(iv) Identify, formulate, implement and enforce policies and fiscal reforms that enhance positive

development in the wood industry and minimize operations of illegal chainsaw loggers and

trade in illegal timber.

Additionally the following objectives were also formulated:

(v) Equipping and funding research institutions to undertake demand-driven research and

development;

(vi) Building capacity of the Forestry Commission and associated institutions for improved

delivery of their missions;

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(vii) Empowering relevant primary stakeholders especially the SMEs to become more efficient

and create wealth for their respective members; and

(viii) Identifying alternate livelihood for affected groups and workers including illegal chainsaw

operators likely to be victims of industry restructuring.

To adequately address the eight specific objectives, a review of the current state of the timber

industry to identify the challenges was found necessary.

2.0 THE CURRENT STATE AND CHALLENGES IN GHANA’S TIMBER

INDUSTRY

A review of numerous references in the Bibliography and verbal communication were held with

relevant institutions to ascertain the current state of the industry. In addition, a brief interactive

questionnaire in Appendix 1 was administered to the management of 10 selected SMEs and large

mills each in Kumasi and Takoradi.

The state of the timber industry presents intractable problems and major challenges that need to

be strategically addressed to curb illegal chainsaw logging and trade in illegal timber. The

following description characterizes the current state and challenges in the industry.

2.1 Inadequate and unsustainable raw materials supply

Technical data on current timber stock: In spite of resource inventories of 1995 and 1997,

illegal chainsaw harvesting, forest fires, shifting cultivation and other activities have rendered

past data on forest inventories obsolete. These activities have created insufficient flow of data to

underpin forest management programmes and formulation of essential fiscal policies in the

industry. A consistent and up-to-date information on the status of forest cover and available

timber stock, bamboo and rattan resources in the forest reserves and off - reserves are needed.

Poor natural regeneration: Lack of effective silvicultural treatment of existing stock has not

promoted natural regeneration. The assumption at the onset of FDMP in 1996 that the forest

estate would steadily improve when forest fires and encroachments are curtailed have not

materialised due to poor regeneration. An effective silvicultural treatment of seedlings and

sapplings sand over-logged areas will boost natural regeneration.

Illegal chainsaw timber accounts for about 75 per cent the Annual Allowable Cut: Between

2000 and 2004, illegal chainsaw logging accounted for about 50% of the 3 million m3 of the

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annual harvested timber. This is about 75 per cent of current AAC of 2.0 million m3. Effective

policies should be enacted and enforced to curtail the illegal menace and protect timber and

other forest resources.

Processed timber is predominantly from the well-known species: About 75% of total legal

timber harvested and processed for export from 2000 to 2004 was from the 13 premium (scarlet)

and 15 commercial (red) species with only 25% from LUS and LKS. This represented 11.5% of

the growing stock of premium and commercial species compared to only 1.65% of the growing

stock of LUS and LKS. Wood quality assessment, product development and promotion of minor

timber species as substitutes of the traditional timber species are needed and most urgent.

Teak log export: Teak logs continue to be exported in spite of inadequate supply of raw material

in the wood processing industry. In 2007, more than 75,000m3 of teak logs were exported in spite

of wood deficit in the domestic market. A legislative instrument or amendment to the existing

policy to curtail export of teak logs.

Innovative raw materials are unavailable: The industry is used to processing of traditional

timber species and use of wood residue and innovative raw materials like buttress wood, branch

wood, coconut wood, bamboo wood and rubber wood are virtually non-existent. Research and

development are needed to promote buttress wood, branch wood, bamboo and rubber wood as

alternative raw materials for the timber industry.

Simulative or substitute wood and wood-plastic products have only recently been

introduced: Simulative wood products including furniture from non-renewable material such as

plastic, steel or glass furniture, T & G, panelings, mouldings, claddings have been introduced at

an insignificant level. These substitutes are in competition with wood. While simulative products

can reduce domestic demand for wood, they may stifle development of SMEs in the wood

processing sector and it can pose a problem in environmental degradation.

2.2 Obsolete Processing Technology

Most processing mills are ill-equipped. Some of the mills in the processing industry are

characterized by old inefficient machines capable of primary processing of only large diameter

logs. The industry production is limited to mainly sawmilling and to a few veneer slicing and ply

milling factories. However the output of plywood production is large and has exhibited a steady

upward trend since 1998. Most mills are not well equipped for downstream processing and it

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calls for a need to install machines which are capable of downstream processing of small

diameter trees.

Machinery for rotary and slicing veneer production are designed for processing of only

large diameter logs: The annual production of sliced, rotary, curls and jointed veneers have

averaged about 280,000 m3. Recovery is generally low resulting in high wastage. Furthermore,

the quality of most of plywood product is suited for the domestic and sub regional markets,

especially Nigeria. Some mills will have to be retooled for machines capable of milling small

diameter logs while plywood production suitable for international market is needed.

There is little integration of the formal processing sector with the domestic market: The

developed formal wood processing industry is export oriented and wood processing for the

domestic market is largely informal. It is wholly dependent on supply of illegal chainsaw lumber

which is relatively cheaper but of poorer quality than the export lumber. Enactment of existing

policies to ensure legal timber supply to the domestic market must be pursued.

The spectrum of technology applied in primary and secondary processing is narrow: The

industry has undergone very little innovation over the years and is generally accustomed to

requiring more timber (high input) to realize higher output. Retooling for value addition and

increased output from the same volume of input should be pursued.

High redundancy and high cost of productions: The industry is faced with escalating cost of

production due to high fuel, raw material, energy and labour costs. Out of 190 sawmills that

existed only about 93 are reportedly active and even then some are operating less than half their

installed capacity. The existing 23 veneer mills and 15 ply mills are equally in short supply of raw

materials while limited tertiary processing companies of furniture parts, mouldings and profile

boards have not seen any growth for the last five years. These problems have resulted in high

redundancy in some companies and others have completely closed down. A sustainable legal

source of adequate raw material and energy are needed to propel the industry and most urgent.

The timber export is characterized by over-concentration: 10 leading companies out of about

200 accounts for about 70% of export trade in value and in volume. SMEs companies should be

financially assisted to go down stream using innovative raw materials and minor species as the

sources of their raw material.

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2.3 Distorted Market

Unsatisfied demand of lumber in the domestic market: The wood industry has been mainly

export-oriented from the very beginning with the domestic market virtually neglected and

depended on illegal chainsaw timber. There is a high, unsatisfied demand for lumber on the

domestic market for building construction and furniture manufacture. Supply of adequate legal

volume and quality lumber to the domestic market remains a major challenge.

Designated companies unwilling to supply wood to the domestic market: In 2005, only about

42,000 m3 of lumber instead of required 500,000 m

3 from 79 designated companies and others

supplied legal lumber to the domestic market in fulfillment of Regulation 36 of Timber Resources

Management Regulations, 1998 (LI 1649). This was mainly due to price differential between

domestic and export market which makes it more profitable for the companies to export and not

to sell on the domestic market. The low level of legal lumber supply by mills to the domestic

market has created a vacuum in the domestic market resulting in high patronage of low priced

illegal chainsaw timber supplied by the numerous chainsaw operators. Normalizing the price

differential between domestic and export market mostly depends on curbing illegal lumber supply

to the domestic market which remains a major challenge in the industry.

Export market for LUS and LKS are non-existent: In spite of vigorous promotion of LUS,

the export market is mostly dependent on the traditional premium (scarlet) and commercial (red)

species with very negligible export of the minor species (LUS and LKS). Intensive research,

vigorous promotion, marketing, enforcement of policies and changes to fiscal policies are the

needed challenges to resolve the current situation.

Disparity between domestic and market price: The price of timber species for export is about

20 – 40% more expensive than the price in the domestic market which is mainly dependent on

illegal chainsaw timber. The export timber however is of higher quality. The price disparity

between export and domestic market should be normalised through promotion and use of legal

timber in the domestic market.

Export of Teak log in the midst of scarcity: Teak log export has continued intermittently over

the last 20 years at the time when raw material supply for the local processing industry has

resulted in ultimate closure of many wood processing companies. In 2007, about 85,000 m3

of

teak logs were exported to Far East countries especially in India and China. Enactment of a new

policy to curtail export of teak logs will be in the interest of a restructured industry.

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Dominance over Export of high quality furniture: About 80% of furniture export is

undertaken by a single company using legal timber. This poses a strong need for more SMEs to

be financially assisted to go downstream processing of quality furniture using innovative wood

materials, LUS and LKS.

2.4 Policies and Legislations

There are currently numerous policies, legislations and fiscal reforms in the timber industry

which are all geared towards ensuring sanity in the industry. However, most of these policies and

legislations have either not been enforced or have been weakly enforced which have all

culminated in inefficiency in the timber industry. Limited stakeholder consultations in evolution

of these policies have also contributed to this problem. Broad stakeholder consultations are

needed in enforcement and enactment of policies.

2.5 Inadequate Infrastructure and Logistics at the FC

The Forestry Commission and its institutions are inadequately equipped with limited capacity,

infrastructure and other logistics that have hindered the Commission from implementing

directives and enforcing existing policies effectively. Middle-level technical manpower has been

the main obstacles to increase and improve value-added processing and export of quality wood

products. WITC is not accomplishing its mission as a technical “Centre of Excellence” in the

West African sub-region, because of lack of adequate experts and equipment, TIDD has not

adequately been positioned to address its vision for the industry. TIDD and FSD is constrained by

lack of logistics, personnel and inadequate financial resources to prosecute its activities.

2.6 Weak Trade Associations

A large number of firms and the trade associations governing them are weak and are unable to

seek the welfare of their members in many respects. Many firms are unable to meet the technical

and marketing challenges and associated business practices. A unified and empowered trade

association could assist in addressing the needs of the members of the wood industry.

2.7 Inadequate Funding of Research

The research institutions, though endowed with well-qualified professionals, are ill-equipped and

poorly funded to undertake any meaningful demand-driven research and development to address

developmental interventions in the industry. A good working relationship between the industry

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and research institutions should be promoted with adequate funding for research institutions to

undertake demand-driven research t o address technical problems in the industry.

2.8 Illegal Chainsaw Harvesting

Independent study by TROPENBOS Ghana estimates that about 68,000 workers are involved in

illegal chainsaw timber harvesting, Illegal chainsaw loggers have over the years had a field day

and trade in illegal timber in the domestic market is well patronized due to inefficient policies,

poor fiscal reforms and ineffective monitoring by the Forestry Commission and its institutions.

Illegal chainsaw timber and trade currently accounts for 50% of about 3 million m3

of timber

harvested annually. Government contractors also patronize chain sawn lumber in the execution of

their projects. Enforcement of existing policies, enactment and promulgation of new ones,

implementation of comprehensive fiscal reforms and political commitments are needed to curtail

the menace.

Strategic development interventions are needed to overcome these challenges and to promote

efficiency and positive development in the wood industry sector. A change in policy focus is

necessary for the industry to play its envisioned role.

3.0 STRATEGIC INTERVENTIONS FOR RESTRUCTURING THE

TIMBER INDUSTRY The FDMP (1996-2020) was expected to contribute to export of value added wood products,

income and employment generating opportunities as well as promote greater intra-sector and

inter-sector linkages. Unfortunately, this laudable aim of the FDMP has not been met and the

principle of high volume raw material for low value output still holds. It is essential that the

challenges to the goals of the FDMP which have been identified are removed and opportunities

created for development of the industry, product development and marketing of higher value-

added wood products. The development interventions that address the challenges in the industry

including sustaining legal wood supply, re-equipping the mills for downstream processing and

normalizing distorted and the under-developed market.

3.1 Supply of Sustainable Raw Materials

The Voluntary Partnership Agreement (VPA), as an instrument to tackle illegal timber and export

of wood products, will result in strict adherence to the current AAC of two million cubic meters.

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This will be woefully inadequate for the industry and a sustained source of legal wood raw

material should be found through following:

i) Sustainable management of existing standing stock;

ii) Ensuring efficient processing and utilization of wood residue;

iii) Increased use of LUS, LKS and TUS to justify increase in AAC allocation;

iv) Improved utilization of non-traditional wood species like rubber wood, branch wood;

coconut wood and bamboo wood;

v) Sustaining production of fast growing timber trees through plantation development;

vi) Importation of logs, lumber or veneers to augment supply from Ghana’s forest and

vii) Use of plastic and wood-plastic combinations and other wood substitutes.

3.1.1 Sustainable Inventory and Management of Existing Stock

Knowing what is left of our valuable timber resource can help maintain sustainable use of the

resource. There is a need to undertake inventory to know the volume of timber trees and non-

forest products like bamboo and rattan that currently exist in our forest reserves. Application of

prudent silvicultural treatments of saplings and immature trees can increase the quality and

quantity of saplings and enhance their natural regeneration and growth to maturity. Likewise, the

quantity and quality of regenerated forest can increase through appropriate enrichment planting.

The assumption at the time of the FDMP (1996) that if the AAC was maintained at 1 million m3

coupled with control of fire/encroachment, the forest estate would steadily improve has not

materialised. It was assumed at that time that the growth of trees below the felling limit would

increase the number of larger trees in 20 years and that the protection of convalescent areas will

promote natural regeneration to form the basis of future yields.

3.1.2 Efficiency in Wood Processing

Timber recovery can increase as much as 50% through installation of modern wood processing

machinery and application of good processing technology by a qualified machinist. The correct

design lay out and balanced engineering of installed machines in the factory can improve

efficiency and productivity in downstream processing.

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3.1.3 Whole Tree Utilization The concept of using everything that is wood from a tree is an innovation which should be

practised in our current situation of wood scarcity. The large buttresses and branches in most

species with a felling diameter of 70cm or more may account for 10 to 40% of tree volume.

Furthermore, their working properties are of reasonable quality to be processed into finished

products like chippings, broomstick, dowels, carvings, floorings and laminated or finger jointed

products using the right equipment and technology. Wood residues from a logging site or the

floor of a timber processing factory usually accounts for 10 to 30% of a harvested log. This

volume of residue is usually left to rot in the forest, processed into charcoal, burnt to produce

energy or discarded as waste. Installation of modern processing machines and available

technology could avail factory managers the possibility of processing these so called “wood

waste” into high valued finished products like briquette, flooring, joinery, framing, laminated

and finger-jointed products. Research, development and promotion of whole tree utilization by

FORIG in collaboration with TIDD and the private sector should be pursued.

3.1.4 Increased use of LUS, LKS and TUS

Most of the premium (scarlet) and commercial (red) species or either endangered or vulnerable

and calls for control of their harvesting to avoid possible extinction. There is the need to process,

promote and utilize LUS and LKS which are in relative abundance as substitutes of the

traditional species and to sustain market demand. Unfortunately, many companies shun

harvesting and processing of LUS and LKS because of apparent non-existence of export market

for the species. This notion should be corrected and imposition of mandatory harvesting and

processing be vigorously promoted for the local and overland market. Technical data on the LUS

and LKS should be disseminated to stakeholders based on their end-use substitutes to the

traditional species. Important target groups in this respect will include the following: Ghana

Real Estate Developers Association (GREDA), the Ghana Institution of Architects (GIA) as well

as the furniture manufacturers that depend heavily on the traditional species.

In addition to the abundant LUS and LKS, there are over 500 tree species of timber size in the

forests of Ghana which have never been used commercially because their technical properties are

virtually unknown. Applied research on the technological unknown species (TUS) should be

undertaken with the aim of increasing the number of utilizable timber species from the current

level of about 80 species. Verifiable evidence of adequate qualities and development of

acceptable products from these minor species could be the basis for future increase of AAC.

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These wood species for tomorrow’s industry should first be promoted for use in the local and the

sub-regional markets. In this respect, LUS LKS and eventually some of the TUS should be

included in future calculation of timber yield and a fiscal policy of harvesting and promoting

them should be enacted.

3.1.5 Utilization of Non–traditional Wood species Commercial utilization of rubber wood for timber in Malaysia, coconut wood in Philippines and

Thailand, and bamboo culms in China and India, are verifiable indicators of the importance of

these non-traditional timber species for industrial use as timber. Ghana abounds in these

innovative wood resources in reasonable quantities which could be harnessed and used as

supplements to traditional timber trees. Over matured rubber trees in the Western and Eastern

regions and the wilted-diseased coconut trees in the coastal regions, have been processed

successfully into furniture at FORIG. Bamboo culms grown in Ghana have been processed in

China into ply-bamboo and quality floorings in spite of the poor quality of the crooked nature

culms with thicker hard nodes. Quality bamboo handicraft products, tooth pick, bamboo

furniture, scaffold and industrial ply-bamboo are already making a niche in the local market. The

natural stock of bamboo stands in Ghana’s forest should be managed and harvested and then

processed into industrial uses. The fast growth of bamboo, with a gestation period of 6 to 8 years,

justifies its uses for plantation development and as a future raw material for the wood processing

industry. EU funding to assists promotion and utilization of rubber and bamboo wood as

supplements to timber should be pursued. Additionally development and utilization of york

(Brossenetia spp.) tree, an invasive species, and palm tree as innovative wood material should

also be promoted.

3.1.6 Plantation Development

The importance of growing timber trees in the midst of scarcity cannot be over emphasized.

There are indications that the previous level of about 200,000 hectares of exotic plantation trees

of teak, Cedrella, and Gmelina, established by the government, private companies and

individuals, has been heavily harvested to a current level of less than 100, 000 hectares.

Plantation establishment rate of 10,000 ha/annum chosen at the time of FDMP has not been met

though below the current rate of displacement. Special incentives should be made available to

promote indigenous plantation of species like wawa, emire, ofram, mahogany and odum. FORIG

should be funded to lead the way for a plantation replacement target of at least 70,000 ha per

annum using superior seedlings. Development of agro-forestry plantation of mixed tree species

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with farm crops is preferred to a monoculture plantation which can be expensive and disastrous in

time of fire and invasion by disease causing insects and pathogens. Displaced illegal chainsaw

operators and redundant sawmill workers from the restructured wood industry should be given

the option to be trained in plantation development as an alternative livelihood. There is adequate

international evidence to show that governments can encourage plantation development by

removing obstacles and creating enabling conditions for farmers and private entrepreneurs.

Private sector roles including communities in plantation development should be favoured to an

expansion of FC’s plantation programme.

3.1.7 Importation of Timber The Customs & Excise Duties (Amendment) Act 503 of 2002 provides a waiver of 45% import

duty and VAT to allow import of timber to minimize the domestic wood supply deficit and

reduce pressure on the natural forests. It is on record that some companies have taken advantage

of this offer and already timber import from the Cameroon, Congo DR and Gabon has entered the

local scene. This should continue as an option in a restructured wood industry. Trade associations

like GTA & GTMO should liaise with FC to import logs for use in the domestic market. The

origin of imported logs should be ascertained to ensure that they are from legal and sustainable

source in accordance to VPA agreement.

3.1.8 Simulative Wood, Wood-plastic and Wood-steel Products

Simulative wood products currently in the market include plastic or metal furniture, T&G,

panelings, mouldings, claddings and substituted wood plastic products or a combination of wood-

plastic or wood-metal. While these products ordinarily may not be recommended because of

problems with their degradation, the current situation of acute deficiency in wood supply gives no

option until such time that the wood supply situation changes for better. Opportunities should be

created for disposal and recycling of synthetic furniture materials due to their low environmental

credentials.

Although illegal timber will have to be curtailed under the VPA agreement, efforts should be

made to meet the current industrial demand of at least 3 million cubic metres through appropriate

legal means. Installation of appropriate wood processing machines wiyh appropriate research

should assist in efficient processing and utilization of wood residue, buttress wood, branch wood,

rubber wood and bamboo culms into quality industrial products. Promotion and increased

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utilization of LUS, and more importantly the LKS and TUS, should make it possible for future

increase in AAC allocation. Export of plantation logs including teak should be curtailed while

development of plantation forest and efficient processing and utilization of small diameter trees

should be vigorously promoted. The option to import logs and use of plastic or steel substitute

wood products to supplement current timber supply to the processing industry is laudable and

should be encouraged.

3.2 Legal Wood Material Supply to the Domestic Market The domestic lumber market is heavily dependent on chain saw timber. In 1995, the consumption

trend showed that furniture and the construction industries made up of 97% of the total demand

for the country out of which furniture industry alone accounted for about 74% of the total. It is

notable that lumber demand by the small-scale carpenters alone is about 50% of the total wood

demand for the domestic market. The introduction of innovative wood materials and promotion of

non-traditional wood species will assist in wood supply to the small scale carpenters.

3.2.1 Chainsaw timber distorts trade in legal timber

Illegal chainsaw timber felling and sawing threaten the already scarce raw material in the timber

industry. Furthermore, the general low prices of chain sawn lumber in the domestic market

distort legitimate trade in legal timber and are a disincentive for the industry to supply legal

timber to the local market. The local dealers in chain saw lumber, on the other hand, complain

about the lack of supply from the saw millers. Any clamp down on chain-sawing activities

without the commensurate measure to address the vacuum created in the industry would

adversely affect the local lumber market and subsequently the furniture and construction

industries. A combination of appropriate and effective policies, fiscal policies and utilization of

innovative raw materials should assist in addressing the current impasse.

3.2.2 LUS and LKS Processing:

Lumber supplies from the mills to the local market are in the form of rejects and residues are of

inferior qualities (e.g. slabs, edgings and off-cuts) while about 50% of the AAC in the form of

LUS and LKS are left standing as a result of marketing problems. One of the immediate options

in addressing this impasse is for the industry to process all the LKS and LUS which are included

in calculation of the AAC for use in at least the domestic market. LUS and LKS harvesting in a

yield should be mandatory for all concessionaires and the stumpage fee should be reduced to

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make them more attractive to harvest. Millers could for example arrange with concessionaires to

purchase the LUS and LKS and process them for the local industry. It requires a paradigm shift

on the part of millers to exhibit a sense of national commitment, reliability, timeliness and

credibility to supply.

3.2.3 Enforcement of Act 547 and LI 1649

The Timber Resource Management Act (Act 547) of 1997 prohibits chainsaw felling while

Resource Management Regulation (LI 1649) of 1998 requires sawmills to supply 20% of their

timber output to the domestic market. Enforcement of Act 547 and LI 1649 will ensure a gradual

restriction of chain saw timber on the domestic market and will require political commitment.

The enforcement of the two policies and reduction of illegal chainsaw timber in the domestic

market will make it more profitable for saw millers to supply LKS and LUS lumber to the

domestic market, and at competitive price.

3.2.4 Equipping the SMEs for Quality Products:

The domestic tertiary market is largely under-developed. Yet it offers a potential for pro-poor

economic growth. This market is largely controlled by an informal sector that relies virtually on

supply of illegal timber. The re-structuring programme must give due emphasis to development

of SMEs in the wood industries and the related support engineering firms. Their capacities and

the capabilities to produce innovative quality products and services at competitive costs from

especially LUS and LKS, should be strengthened and integrate them into the international supply

chain. Advisory and outreach services must be provided to equip SMEs with new and improved

management style, business practices, production methods, marketing and distribution in order to

raise their productivity, efficiency and profit levels.

3.3 Technology and Capacity Building for Downstream Processing The restructured timber industry is expected to contribute to greater export of value added wood

products, income and employment generation and promote greater intra-sector and inter-sectoral

linkages. A principal thrust in the restructuring programme will be the development of a

competitive, innovative and technologically strong SME sector. To achieve this objective, it is

essential that the barriers to the goal of the FDMP is identified and removed and opportunities

created for development, production and marketing of higher value-added products. Assuming

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adequacy of wood raw material, the following strategies will have to be met for an effective

downstream processing industry in a restructured wood industry.

i) Re-equip selected mills of SMEs with efficient machines for downstream processing;

ii) Provide training and manpower development through technical cooperation;

iii) Build the capacity of SMEs in innovative processing technology and business skills;

iv) Seek effective support services and global strategic alliance with international players;

and

v) Promote market-oriented R&D and technology development

These five strategies are further discussed below:

3.3.1 Re-equipping for Downstream Processing

The existing wood-processing industries must be re-engineered to improve efficiency, to balance

industrial capacity with legal and sustainable supply of raw materials and to demonstrate that the

mills can make positive contribution to the national economy. Obsolete inefficient machines

currently being used by SMEs will have to be replaced with cost-effective, energy efficient

machines capable of producing high quality innovative products for a competitive domestic and

international markets.

With the rising cost of energy and its adverse effect on cost of production, energy-efficient

technologies will have to be used. The specifications for imported machines and equipment will

be planned to conform with national established list which should be compiled with prior to

importation. The installation of these machines at the factory floor will be properly planned to

ensure free flow of manufacturing processes with minimal movement of raw materials, goods and

factory workers. The installed machines must be capable of processing small diameter logs, wood

residues and other innovative wood materials including bamboo and coconut wood.

A wood industry specialist and industrial engineer should be attached to TIDD to provide needed

technical services to the industry. Soft loans should be made available to the SMEs to purchase

new machines and equipment needed to improve tertiary processing. Companies accessing the

fund should meet eligibility criteria set out by the FC including their willingness to use minor and

innovative wood materials as their raw wood material. Processing mills that are currently far

from the source of raw material should be encouraged to relocate to the source. The EDIF,

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NREG, ECOWAS, World Bank, Venture Capital and EU funds will be sought to complement the

efforts of commercial banks to provide more integrated assistance packages to SMEs.

3.3.2 Quality and Standardization of Wood Products

The capacities and capabilities of SMEs to produce innovative quality products and services at

competitive costs will be strengthened so as to integrate them into the international supply chain.

Advisory and outreach services will be provided to equip the SMEs with new processing

technology, improved management and business practices, quality assurance and promotion

marketing in order to raise their productivity and efficiency. In the light of the foregoing, the

status of the Nkinkasie Wood Processing Village will have to be assessed and the necessary

support and technical assistance provided for efficient operation and possible replication in other

wood producing areas of the country.

Lack of standards encourages waste and does not facilitate production efficiency which in turn

adversely affects production costs. The quality of wood products will be promoted through the

use of standards and certification of all products. The standards compiled by the Ghana Grading

Rules Consultative Council (GRCC) under the auspices of the TIDD for logs, lumber, veneer,

plywood and mouldings will be adopted for use by the industry. Likewise, GREDA, the GIA and

FORIG will work towards standardisation of building components (e.g. roof trusses). This should

facilitate mass-production of building components by the industry. International cooperation will

be needed to develop and implement product standards and building codes so as to gain

international recognition of Ghanaian wood products.

3.3.3 Building Capacity of SMEs in Processing Technology

Training and development of middle level technical manpower is the key to increase efficiency,

productivity and quality of value-added products. EU-FLEGT facility should be sought to

restructure the WITC and equip it with appropriate array of training machineries and manpower

resources to be able to undertake its roles as excellent provider of technical training in

sawmilling, veneer and plywood production and tertiary wood processing to the industry. The

restructured WITC, transformed into a Centre of Excellence, will then undertake effective formal

and customized training on factory premises.

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3.3.4 Effective Support Services and Global Alliance

There is need for support to upgrade the capacity of the relevant sections of the local engineering

industry to supply parts, components and modules for the timber industry. In addition to targeting

promising areas in the local market, greater partnerships would be formed with foreign affiliates

in targeted growth areas. This will enable Ghana’s wood industry to become a crucial part of the

international economic chain and produce goods and services that create new demand and market

opportunities.

3.4 Marketing of Legal Timber & Wood Products

Traditionally, the timber industry is export market oriented. From a basic logging background, the

industry has evolved into both secondary and tertiary processing although secondary processing

dominates considerably. The three market segments of domestic, overland and overseas are

described with recommended interventions to make them more productive.

3.4.1 The Domestic Market There is a considerable demand for wood in the domestic market and the huge deficit created is

supplied by relatively cheaper illegal chain-saw lumber. However, the cheaper price of domestic

illegal lumber does not motivate producers of legal lumber to sell on the domestic market. A

major challenge for intervention in the VPA restructured industry, is how illegal chainsaw timber

can be curtailed in the domestic market and yet meet the demand of timber at an affordable price.

3.4.2 Overland Export This is the market for less timber endowed countries of the ECOWAS. The characteristics of the

market are quite similar to that of the domestic market but this market offers higher prices and

better returns. In 2007, the ECOWAS market imported about €32 million of wood products which

accounted for about 17% of the total wood export earnings. The bulk of this earning was derived

from plywood at a time that the local plywood market has slumped. The industry regards this

market as quite lucrative and this niche under a VPA restructured industry have to be protected.

Provision should be made to train and familiarize officials of CEPS, port authorities and freight

forwarders in grading rules and export documentations for efficiency and transparency.

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3.4.3 Overseas Export Market

This huge market includes of Europe, non European Union countries, North America and the Far

East including S.E. Asia, China etc. The European and North American Markets are very

sophisticated and discerning, and together accounted for about 58% and 56% of the volume and

value respectively of timber products trade in 2007. The market is extremely environmentally

conscious and insists on product certification in conformity with sustainability and legality

criteria but offers better prices which are higher than the rest of the markets. A restructured wood

industry under the VPA will have to hold on to the overseas export market by ensuring quality

standard for export of tertiary wood products. The Far East markets prefer to buy in large

volumes of even the minor commercial species. As stated elsewhere in this report, trade

associations liaising with FC could execute bulk orders from Far East by distributing the orders

among SMEs and arranging their after production. The export of huge volumes of unprocessed

teaks has resulted in significant strain on an industry that is already struggling with dwindling

resources and a recommendation to curtail export of teak logs has already been made in this

report. The possibility of a joint venture with the major market players from the Far East and

India should be pursued.

3.4.4 Export of Tertiary products Most of the tertiary products including furniture are geared for European and North American

market. In 2006, tertiary product exports contributed about 8% of volume and 10% of value and

in 2007 it contributed 6% by volume and earned 9% of value of the total wood products. It is

expected that export of tertiary products in the restructured industry will increase in volume using

lesser volume of timber to achieve the same value. The possibilities of producing tertiary

products from the LUS, LKS and innovative wood products for export to the Middle East should

be the ultimate goal of a restructured industry. This intervention will assist in conserving our

vulnerable and endangered species and contribute to reduction in illegal timber trade.

3.4.5 Limitation to Species Utilization and Export

Export of timber revolves around some twenty species and in 2007 seven of such species namely

Teak, Wawa, Mahogany, Asanfina, Ceiba, Ofram, and Chenchen contributed about 80% of

volume and 70% of value of total timber export. The implication for the future is that these

species will soon become endangered and emphasizes the urgent need to promote extensive use of

LUS, LKS and TUS as has already been stated.

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3.4.6 Use of Illegal Timber to Government Funded Projects

The FC should enforce all existing laws which restrict the use of illegal chain sawn lumber in the

domestic market. Elsewhere in this report, it has been stated that the government, as the largest

single consumer for chain sawn lumber, must restrict the use of illegal chain sawn timber in the

domestic market by ensuring that Public Procurement Board prohibits use of chainsaw timber for

all projects funded by the government. There must be proof for use of legal timber for all projects

funded by the Government.

3.4.7 Market Promotion of LUS, LKS and TUS

In 2006, the LUS contributed only 15% by volume of all kiln dried lumber sold while the LUS

component of veneer export was about 26%. The overwhelming dependency on few traditional

species particularly the premium (scarlet) and commercial (red) species, poses considerable

limitation on future wood supply to the industry as these species are gradually becoming scarce

and vulnerable. The need to vigorously promote the use of LUS and LKS in wood processing

industry which has already been stated is emphasized. The Forestry Commission in collaboration

with relevant research institutions should identify and select some of the numerous technological

unknown species (TUS) for wood quality assessment, product development and promotion to

increase the number of utilizable species and support the future of a restructured industry.

3.4.8 Substitute Trade and Use of Minor Species for Well-known Species

It will be necessary to classify all timber (traditional and minor) species on the basis of their

similarity in technological properties, colour, density, durability and end uses to facilitate

substitution of the minor less popular species for the traditional well-known species. All species

with almost identical properties and uses can then be traded as a substitute for the traditional

species using their trade names. The new trade names of the substitutes can be differentiated from

the original traditional trade names by using an appropriate prefix like “new” or “substitute” etc

to differentiate them from the original trade names of the traditional premium or commercial

species. This will help to promote trade of the minor species in the domestic and export market.

Collaboration with relevant stakeholders in the building industry will also be helpful.

3.4.9 Trade Information, Dissemination and Promotion

More trade information on new products, processing technologies, exhibitions, seminars and

workshops should be made available to the industry by TIDD or relevant trade associations. The

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revival of GIFEX as a promotional tool and forum for wood industry is a laudable concept. The

TIDD must adopt Information and Communication Technology (ICT) in their marketing

intelligence as a means of receiving and disseminating information to the industry. The industry

must be persuaded and encouraged to establish joint ventures and partnerships with organizations

and companies that already have considerable linkages and experience in design and marketing of

such products.

3.4.10 Training of CEPS, GPHA and Freight Forwarders in wood export

Export of timber and wood products by air, sea or road involves various custodies that include

officials from CEPS, GPHA and. freight forwarders. Provision should be made for periodic

training for these officials to familiarize themselves in such areas as grading rules, export

documentation, chain of custodies and certification which will be part of future export

requirements under the VPA.

3.5 Policies, Legislation and Fiscal Reforms

The need to use fiscal incentives or tax packages to sustain the effects of business transactions

and social benefits has been suggested. The stumpage fee for all premium and commercial

species (about 18 scarlets and reds), classified as vulnerable by IUCN and face high risk of

extinction in the medium term future, should be reviewed upwards. An increase in stumpage fee

by about 25% species is recommended. The increase in stumpage fees is to make harvesting of

these vulnerable species unattractive in relation to the LUS and LKS and at the same time

conserve their possible future extinction. Part of the proceeds from stumpage fee can be used for

payment of community guards. Furthermore, a new policy that will prohibit export of the

vulnerable species and restrict their use for downstream processing is urgently required.

Conversely, the stumpage fee for use of minor species (LUS, LKS and TUS) should be pursued by

decreasing the stumpage fee by 10 to 15% to make it more attractive to harvest them and process

for the domestic market. It should be mandatory for all TUC and concession holders to harvest

all LUS and LKS in a yield by imposing a policy of total yield removal.

3.6 Capacity Building and Infrastructural Development

The industry restructuring must support pro-poor economic growth and contribute to national

wealth. The industry must be efficient, producing a product mix and selling products on

willingness to pay basis. The industry must take advantage “at the margin” of the wide spectrum

of product specifications offered by global and international markets. The FC through TIDD

must be resourced adequately to reposition itself to support the developmental vision. It must

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move away from fundamental marketing and grading functions to a future role in regulation,

promotion, training for industrial development and operational research. These will require

human resource development, improvement in infrastructure and other logistics.

WITC, as a unit of TIDD, must be a step ahead of an efficient re-structured industry in human

resource development, technical knowledge and markets to accomplish its mission as a technical

“Centre of Excellence” in the West African sub-region. A change in policy focus is necessary to

play its envisioned role which cannot happen unless there is a comprehensive repositioning in

ownership, organizational reforms and financial evaluation. A tripartite initiative consisting of

EMPRETEC, WITC and NBSSI could assist in procurement of financial assistance in addition to

EU support to restructure the SMEs including upgrading of current skills and technical expertise.

The effective achievement of the strategic directions requires strong inter-sectoral cooperation of

MFEP, MLFM, MES, GIPC, CSIR, NDPC with the Ministry of Finance and Economic Planning

as Coordinator. Efforts will also be pursued to encourage the local firms in engineering to support

the wood industry to take advantage of the global trend of outsourcing for machinery components

and modules worldwide. Such alliances would facilitate the upgrade of their technology and

production capabilities as well as participate in the extensive outsourcing activities.

The capacity of the FSD will be improved to among others hire forest guards from the fringe

communities to man forest reserves and protect them against illegal logging. The capacity of

FSD will be enhanced to monitor illegal logging to manage silvicultural interventions to enhance

regeneration of logged-over forests and give support services for private plantation development.

3.7 Empowerment of Trade Association

The principal thrust of the restructuring programme will be development of a competitive,

innovative and technologically strong SME sector. The latter will work within global and

regional structures in order to develop economic integration and strategic partnerships with

international businesses as well as sustain growth and competitiveness in the industrial sector.

Presently the fragmented associations are not responsible to the needs of their members which

include objective trade references and their interpretation, research and development, industrial

engineering, advisory inputs on technical management, trade arbitration, trade union negotiations,

and many more. All stakeholders in the wood industry to should form an effective trade

associations that will collaborate with FC and other stakeholders to address the deficiencies and

among others seek loans and other logistics to support their members. The empowered

association can lobby politicians and policy makers, and promote sustainable harvesting and

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plantation development in the industry. The association can promote initiative towards creation

of a Professional Graders’ Association financed by the industry but without any allegiance to any

single or group of enterprises. The Ghana Grading Rules Consultative Council (GRCC), under

the auspices of the TIDD when properly empowered, could for example seek immediate

promulgation of standards for logs, lumber, veneer, plywood and mouldings by the Standard

Board.

3.8 Promotion of Demand-driven Research

There should be allocation of funds and grants from proposed fiscal reforms for industrial

research and development, and commercialization of research and technology for development of

technology for the minor species and innovative raw materials. Research into improved

understanding and field application of ecological principles will be promoted to improve

silvicultural practices in the natural forests and improvement in yield calculations to facilitate

sustainable forest management practices. Biotechnology will be used for production of improved

genetic planting material to support the national plantation efforts for high quality plantation

wood in the future. Research into development of agro-forestry plantation of indigenous

commercial timber species are needed as well as research and management of bamboo clump for

production of straighter culms with longer internodes, small nodes with thicker fiber wall.

Technological properties and eventual promotion of TUS should be investigated with the aim of

increasing and diversifying timber species which can be used commercially. Research on

processing and utilization of innovative wood materials like bamboo, coconut and rubber wood

should be intensified to increase volume of utilizable wood raw material. Increasing the durability

and arresting sap stain in LUS, LKS and TUS and wood products are challenges that have to be

addressed as part of demand-driven research initiatives.

3.9 Alternative Livelihood for Displaced workers

It is expected that a fair number of about 68,000 people currently involved in illegal chainsaw

timber will be made redundant after the wood industry has been restructured under the VPA.

Most of these people will include chainsaw operators who would have either laid down their tools

or had been forced to quit the illegal trade; and other workers who will be made redundant as a

result of wood industry going downstream. These people will have to be retrained to acquire new

skills for alternative and sustainable livelihood. They will be given necessary skills and loans to

go into plantation development while some from the fringe forest communities will be employed

as forest guards or tour guides. .Other alternative training will be in batik dyeing, grass-cutter

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and mushroom farming, and in carpentry, masonry and block making. EU-FLEGT makes

allowance for assistance in the form of grants to promote these ventures.

4.0 The Effect of Restructuring in Reducing Illegal Chainsaw

Harvesting and Trade

The TOR seeks to relate how a restructured timber industry will assist in reducing illegal

chainsaw timber logging and trade in illegal timber. The Committee found it necessary in this

chapter, to list some of the recommendations that have formed the content of the Committee’s

report.

1. Policies and legislations should be fully and strictly enforced.

No meaningful development can be achieved in the timber industry unless policies and

legislations are strictly enforced and are devoid of political interferences. The FC should take

advantage of There is provision for EU-VPA assistance to partner countries to implement policies

and legislations that promote legality in timber trade.

2. Fringe communities should be employed to protect the forest.

EU-FLEGT Action Plan encourages private sector to build capacity in forest management.

Fringe communities in collaboration with FC will be empowered to appoint youths in the fringe

communities as forest guards to curb illegal chainsaw activities and sanction offenders.

Remuneration for the guards should come from increased stumpage fees recommended to be

imposed on premium and commercial species and EU assistance as in EU-FLEGT briefing Note

1:3.1.

3. Promotion and increased use of LUS and LKS.

Increased use of the minor species will increase volume of domestic timber supply, reduce

pressure on wood supply and lower domestic demand to make illegal chainsaw timber less

attractive to buy. FC should make it mandatory for concessions and TUCs holders to harvest all

LUS and LKS included in a yield.

4. Increase in stumpage fees for vulnerable species.

The stumpage fee for all premium and commercial (about 18 scarlets and reds) species should be

reviewed upwards. The list should include all species classified as vulnerable by IUCN and face

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high risk of extinction in the medium term future. A legislative review to increase stumpage by

about 25% is recommended. The increased in stumpage fees is to make harvesting of these

species unattractive in relation to the LUS and LKS and at the same time conserve their possible

extinction. Part of the proceeds from increased stumpage fees will be used to support payment of

guards from the fringe communities.

5. Enforcement of Timber Resources Management (1997) Act 547, LI 1649 and Act 663.

The Timber Resources Management Act 547 of 1997 and Regulation LI 1649 which proscribe the

use of chain sawn timber should be strictly enforced. Furthermore, Procurement Act 663 should

be amended to proscribe the use of illegal chain sawn timber for government projects.

6. Retooling will increase efficiency and reduce demand for raw timber material

The restructured timber industry going downstream will require less volume of raw material to

produce high value of wood products and will contribute to conservation of raw material.

Development of the formal and informal MSMEs to support the domestic tertiary processing will

be driven partly by improved technical proficiency resulting from a retooled industry. The EU-

FLEGT has support for private sector’s initiative in going downstream as in 3.4 of Briefing Note

1. One of the conditions for SMEs to qualify for assistance to go down stream will be an

undertaking to use only legal timber preferably the LUS and LKS and avoid use of illegal timber

in all their activities.

8. Plastic/metal substitutes and plastic/wood or metal-wood combinations to be promoted.

The high demand of legal timber and the inability to supply the market with legal source of raw

material, calls for other non-wood substitutes. Plastic-wood and wood-metal combinations should

be encouraged until such time that pressure from the industry suggests otherwise. Environmental

considerations have to be taken to the disposal of these non-degradable materials.

10. Capacity building of FC

Some special areas in FC establishments at WITC, FSD, RMSC and TIDD, will be strengthened

and provided with the needed infrastructure, equipment and other logistics to perform their roles

of protecting and sustaining the forest. Research, development and training will be essential

interventions for efficient use of raw materials and downstream processing to create high value

from less volume of wood. These areas have to be identified and support sought from FLEGT

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11. Alternate livelihood for victims of a restructured wood industry

All potential victims of a restructured wood industry will need an alternative livelihood. Training

in plantation development, snail, honey, mushroom and vegetable farming, carpentry, masonry

and block making will be some of the skills to be acquired. All potential trainees will be

registered for the free training and will be assisted to start a new business in the acquired skill. .

FC is encouraged to take advantage of all the available incentives from EU to implement most of

the recommendation.

5.0 CONCLUSIONS & RECOMMENDATIONS

There are great opportunities available to the proposed timber industry restructuring that when

effectively implemented will contribute to reducing illegal chainsaw logging and promote trade in

legal timber. The following specific recommendations for restructuring the wood processing

industry are tabled for funding from EU and other funding agencies. The proposed budget that is

needed to accomplish the interventions are shown below and in Appendix 2.

A. Sustainability of legal raw material

• *Inventory assessment of forest resources of Ghana including forest cover, timber trees,

bamboo culms and rattans EU support of 5 mill Euros; GOG 1 mill GHC for 3 years

• *Sustainability of legal raw material supply through an expensive plantations development

programme taking into account market requirements and environmental considerations in the

selection of species. Enabling environment and legislature will have to put in place to ensure

access to land and capital to help address the raw material requirement gap in industry. EU

support of 20 mill Euros ; GOG 1 mill GHC for 5 years

• *Development of non-timber forest products such as bamboo, rattan, rubber and coconut

wood as a means of complementing and sustaining future raw material to the domestic and

international markets including inventory of bamboo and NTFP. EU support of 3 mill

Euros; GOG 0.5 mill GHC for 3 years

• *Capacity building of FC and its institutions (TIDD, FSD, and WITC) to strengthen their

regulatory role and be more accountable while improving transparency in award and

auctioning of the timber resource and ensuring that policies and fiscal reforms are fully and

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strictly entrenched and complied with. EU support 6.5 mill Euros; GOG 1.85 mill GHC

for 5 years

• Public Procurement Policy to prohibit use of illegal chainsaw timber on the domestic market

for all government contracts. This will be done in consideration with other policy

interventions under the domestic market recommendations. Funded by GOG for 3 years

• *Measures and incentives to involve fringe forest communities for participation in the

management and protection of the forest. This will require policy and legislative review in

support of the communities and to cater for small to medium size forest enterprises as

proposed in the domestic market interventions. EU support of 2 mill Euros; GOG 0.5

mill GHC for 5 years

B. Import of Raw Material

• GoG through FC is to arrange with trade missions to promote buyer-seller networking in

African timber producing countries to encourage the growth in imports of logs, sawn timber

and veneer. This will however have to be done in tandem with industry retooling to ensure

that Ghanaian timber firms can produce value added products competitively for the domestic,

regional and international markets.

C. Downstream Processing

• Assistance should be sought to re-equip selected SMEs for downstream processing and

production of quality wood products using LUS, LKS and innovation wood materials

including bamboo, rubber and coconut wood. The source of assistance can come from Wood

Sector Development Programme (WSDP – ACP GH 054) that provided support to the wood

sector in utilization of lesser used species, kiln drying and value added wood products.

• *Provision of common facilties at Nkenkasie Wood Village cluster of wood industries EU

support for 2. 5 mill Euros; GOG 0.7 mill GHC.

D. Market and Trade

• Improved marketing intelligence for competitive price and access to international markets

EU support for 3.5 mill Euros GOG 0.95 mill for 3 years

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E. Trade Associations

• Empowering trade associations to be more efficient and accountable including promoting

their participation in the protection of the forest resources. Provide technical assistance to

trade associations in developing their purchasing policies and working towards self-

regulation. EU support for 3.0 mill Euros; GOG 0.35 mill GHC for 3 years

F. Research and Development

• Adequate funding for research institutions to undertake demand driven research and promote

research-industry linkages.

G. Alternative Livelihood

• *Training in sustainable alternate livelihood for displaced chainsaw operators and other

workers in the industry as a result of reforms under the VPA. EU support for 6.0 mill

Euros; GOG 1.0 mill GHC for 3 years

H. Professional Associations

• *Developing capacity in civil society and the private sector, in particular Ghana Institute of

Foresters, to undertake independent forest industry monitoring.Collaboration with

international partners should also be encouraged in support to the LAS and other industry

requirements for forest management and monitoring. EU support for 1 mill Euros; GOG

0.15 GHC for 3 years

The Committee is conscious of the fact that no meaningful development can come out of any

intervention unless policies and legislations governing such developmental interventions are

properly and effectively implemented. The group therefore recommends a special task force of all

stakeholders to over see to the implementation of all policies, legislations and fiscal reforms in

the industry. These interventions properly and effectively implemented will allow for creation of

incentives and enabling environment for promoting tertiary processing and provide opportunities

for industrialization and employment creation within the sector. While some policies and the

interventions recommended in this report may not always be in tune with those suggested for

funding in the EU-FLEGT briefing notes, a crossed fertilization from the two sides might forge

he way forward.

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The Committee further recommends that all displaced persons of the restructured industry

should be registered for the purpose of training in alternative livelihood and possible provision of

EU-FLEGT assistance to start new business. This will go a long way to mitigate adverse social

impacts of down sizing in a VPA restructured industry. Inability to implement this

recommendation could lead to resort to illegal logging that could endanger the sustainability of

Ghana’s precious forest resource and the timber industry.

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7.0 BIBLIOGRAPHY Birikorang, G. (2001) Ghana Wood Industry and Log Export ban. Report prepared for Forestry

Commission and DFID.

Bentum, A.L.K. (1987) Local Substitute for Foreign Timbers. Information Bulletin No.7

Forestry Products Research Institute, Kumasi, Ghana.

Brazier, J.D. & Webster, C. (1977) Timber standards based on end-use for more efficient

utilization of forest resources especially in the tropics. Unasylva 29, 15-19.

Elliot, G. & Pleydell, G. (1992). Marketing and utilization of plantation species, Overseas

Development Agency – Ministry of Lands and Forestry.

Fergusson, K. (1970) Ghana Hardwoods. AS. Worth, London, UK.

FLEGT BREIFING NOTES: Briefing Note Number 01 – What is FLEGT?

FLEGT BREIFING NOTES: Briefing Note Number 02 – What is Legal Timber?

FLEGT BREIFING NOTES: Briefing Note Number 04 – Control of the Supply chain: Wood

tracing systems and chain of custody.

FLEGT BREIFING NOTES: Briefing Note Number 06 – Voluntary Partnership Agreements.

FLEGT BREIFING NOTES: Briefing Note number 08 – What are the WTO Implications

Food and Agricultural Organization (FAO) (1988) Forest Inventory Project: Classification of

Ghana High forest trees. Rome, Italy.

Forestry Department (1977). Commercial classification of timber species. Accra,

Ghana.

Forestry Department (1987) Proceedings of Ghana Forestry Inventory Project Seminar, 29 –

30 march, 1989. (Ed. J. L. D. Wong).

Forestry Department (1992) Handbook of harvesting rules for sustainable management of

tropical high forest in Ghana. Ghana Forestry Commission, Accra, Ghana.

Forestry Department (1994) Timber species classification and the assessment of exploitation

pattern. FIMP Discussion Paper 4. Kumasi, Ghana, unpublished.

Forestry Department (1995a) Volume table by species and diameter class produced by FIMP

Forestry Department, Planning Branch, Kumasi, Ghana. (unpublished)

Forestry Department (1995b) Timber yields from the forest reserves of Ghana. Planning

Branch, Forestry Department, Accra, Ghana.

Forestry Department (1997) Off-reserve inventory results. Planning Branch, Forestry

Department, Ghana. (unpublished)

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Forestry Department (1992) Handbook of harvesting rules for sustainable management of

tropical high forest in Ghana. Forestry Department, Ghana

Forestry Department ( 1995) Timber yields from the Forestry Reserves of Ghana.

(unpublished)

Forestry Research Institute of Ghana (1984) Anatomical and wood quality studies of lesser-

known and plantation species. Mid - Year Report, Kumasi, Ghana.

Ghana Forestry Commission (1999) Report on export of wood products. Timber Industry

Development Division, Takoradi, Ghana.









Ghana Forestry Commission (2002) Multi resource inventory of Ghana’s high forest zone.

Inventory and Mensuration Unit, Resources Management Support Centre, Kumasi, Ghana.

(unpublished)

Ghana Forestry Commission (2005) End-use indication for the hardwoods of Ghana. Accra,

Ghana.

Hawthorne, W. D. (1993) Forest regeneration after logging. ODA Forestry series No.3, Natural

Resources Institute, Chatham, Maritme, Kent, U. K.

Hawthorne, W. D. & Abu-Juam, M. (1995) Forest protection in Ghana with particular

reference to vegetation and plant species. IUCN Forest Conservation Programme

International Trade Centre UNCTAD/WTO (ITC) Final Draft Report for the ITTO:

(JANUARY 2001): Review of the Status of Further Processing of Tropical Timber In Producing

Countries.

Jesse-Dodoo, I., & Judd, N. (PROFOREST): Review of Proposed Wood Tracking System

(WTS).

Jayanetti, D. L. (1998) Lesser-used in construction. In International Conference on Value-added

Processing and utilization of lesser-used Timber species.

Kuffour, B. (1998) Increased Utilization of lesser-used species-social and economic impact. In

International Conference on Value-added processing and utilization of lesser-used species, 17-19

February 1998. Forestry Research Institute of Ghana, Kumasi, Ghana.

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Kyere, B. (1994) Seed phenology and germination of Ghanaian forest trees. (PhD) Thesis.

Aberdeen University, Aberdeen, Scotland, U. K.

Oduro, K.A. & Gyan, K. (September, 2007). Draft Document on Definition of Legal Timber in

Ghana.

Ofori, J. & Addo-Ashong, F. W. (1987). End-use guide for Ghanaian timbers. Info Bull. No. 6.

Forest Products Research Institute, Kumasi, Ghana.

Oteng-Amoako, A., Ebanyenle, E. & Awuku, F.A. (1998) The identification of 14-under

exploited promotable lesser-used timber species of Ghana. In International Conference on Value-

added Processing and Utilization of Lesser-used Timber Species, 17-19 February 1999. Forestry

Research Institute of Ghana, Kumasi, Ghana.

Oteng-Amoako, A. A. & Sarfo, D. (2003) Development of Teak Plantation in Ghana.

Conference on Management of Teak from Sustainable Forest, 2-5 December, 2003. Kerala Forest

Research Institute, Peechi, India.

Oteng-Amoako, A.A. (Editor) (2006) 100 Tropical African Timber Trees from Ghana Tree

description and Wood Identification with Notes on Distribution, Zoology, Silviculture,

Ethnobotany and Wood Uses. Graphic Packaging, Accra, Ghana 304 pp.

TEDB (1995) The Ghana Timber Industry: basic information: facts and figures. Timber Export

Development Board, Takoradi, Ghana.

Thompson, R. (1980) Some lesser-known Commercial timber trees of Ghana. Ghana Timber

Marketing Board, Takoradi, Ghana.

Thompson, R. (1980) ABC of uses of Ghana hardwoods. Ghana Timber Marketing Board,

Takoradi, Ghana.

Timber Industry Development Division (TIDD/FC) (Technical Report, December 2006). The

State of the Timber Industry, 2006

Timber Industry Development Division (TIDD/FC): Report on Export of wood Products;

December 2006

Timber Industry Development Division (TIDD/FC): Minimum Guiding Selling Prices (F.O.B)

– Lumber and Other Wood Products for the Period October – December 2007

VPA Briefing Papers : VPA Briefing Paper 1 – Ghana’s entry in VPA with the EU

VPA Briefing Paper 2 – The VPA Process.

VLTP background Paper #1 – Review of the current taxation system relevant to the forest

sector in Ghana.

VLTP Background Paper #3 – Institutional Framework for Implementation of VLTP

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APPENDICES

Appendix 1: Questionnaire on the State of Ghana’s Wood Processing

Industry.

A. RAW MATERIAL SUSTAINABILITY

1. What is the source of your raw material?

2. What type of wood material do you use including class of timber species?

3. Have you ever used the following raw material for your factory? Bamboo, rubber

wood, coconut wood, branch wood.

4. Will you like to use any of them, if technology and equipment are available to you

and why?

5. What are your company’s views on competitive biding process?

6. What are your company’s views on the VPA process?

7. What is your view on teak log export? Will you favour its restriction for use in

domestic market?

B. PROCESSING

1. What machines do you use and how old are they?

2. Where did you but it from?

3. What species of timber are processed by your company and where do you get

them?

4. What is your sawing recovery?

5. What tertiary products are produced?

6. What kind of training needs do you have?

7. What is your company’s view on VPA?

C. MARKETING

1. What kinds of products are marketed by your company?

2. What is the destination of your products?

3. How do you market your products?

4. List any problems you have encountered while marketing your products.

5. What do you think should be the best way to market your products for

competitive price?

6. What is your company’s view on VPA?

7. What is your view on price disparity between domestic and export timber market?

How can the disparity be reduced?

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Appendix 2: Budget for Selected Development Interventions for EU and other Agencies Support

GHANA VPA NEGOTIATIONS: DEVELOPMENT OF TIMBER INDUSTRY INTERVENTIONS FOR EU FINDING (in order of priority)

Project Project

Description

Project’s Purpose Duration Cost, €

million

Expected Benefits Activities

1. Research and

Promotion of

LUS, LKS, TUS

Research and

development

programme of

FORIG to support

promotion and

increased

utilization of

LUS/LKS/TUS.

This project will seek to create greater market

opportunities for timber utilization of LUS,

LKS and TUS. The purpose of the project is

to foster reduction in pressure on

traditional timber resources and thereby

reduce tendency towards illegal logging.

3 years 2.5

(0.95)

• Protection of forest integrity and

improved long term forest productivity.

• Protection of endangered timber species.

• Improved long term legal raw material

supply.

• Improved revenue generation.

• Selection of species.

• Research into basic technological

properties

• Product development

• End-use classification of species

• Promotion and marketing

2. Bamboo and

rubber wood

development

Development of

bamboo and

rubber wood as

alternative raw

materials for the

timber industry

The purpose of this project is to increase

legal raw material availability for the

timber industry using rubber wood and

bamboo wood.

3 years 2.0

(0.65)

• Increased raw material supply to the

wood processing industry.

• Enhanced industrial use of bamboo wood

and rubber wood.

• Enhanced sustainable utilisation of forest

resources.

• Research on technological

properties.

• Preservation of raw material.

• Processing technologies.

• Product development.

• Promotion and marketing.

3. Plantation

Development

Development of

private and public

commercial

plantations at a

rate of 50,000 ha

per annum

The purpose of the project is to develop

expansive plantation as a future source of

sustainable raw material for wood

processing industry.

5 years 20 • Increased plantation cover

• Rehabilitation of degraded forest

• Improvement in environmental quality

• Increased in future raw material source

of wood raw material supply to the wood

industry

• Land acquisition and

demarcation.

• Identification and selection of

developers.

• Preparation and acquisition of

planting materials

• Planting of plant materials.

• Maintenance and management of

planted forests.

4. Improved

wood processing

machineries

Re-capitalization

of Ghana’s forest

industry re-

structuring

programme

This project seeks to provide investment funds

for industry re-tooling and transformation

necessary to achieve downstream processing .

It will target both the export and domestic

markets. The purpose of the project is to

create value addition without re-course to

forest over-exploitation.

5 years 290.0 (#) • Creation of economic value addition and

contribution to pro-poor growth.

• Criteria setting for identification

of beneficiaries

• List compilation of machinery

types

• Procurement and installation

• Training

5. Private sector Technical This project seeks to encourage downstream 3 years 5.0 • Improved returns on industry • Identification of training needs

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development assistance to

support

downstream

processing

processing through target-enterprise technical

assistance programmes and provision of

machinery through soft loans for LUS/LKS

processing. Purpose of this project will be

to reduce industry risks during

transformation and sustain stakeholders

commitment to promote the use of “legal

wood”

(0.75)

investments and “timber legality”.

• Improved technical knowhow to 5

SMEs.

• Acquisition of machinery by SMEs.

• Improvement in value addition.

and selection of facilitators.

• Workshop and training in

downstream processing.

6. Nkinkasie

Wood Village

Wood industry

cluster

development

The project seeks to improve facilities at

Nkenkasie Wood Village by providing

common facility services including machinery and technical services.

3 years 2.5

(0.7)

• Availability of common service

facilities.

• Skill development off artisans

• Improved product quality synergy of

production units.

• Increased market opportunities.

• Appraisal and evaluation of

common facilities.

• Identification of interventions.

• Acquisition and installation of

machineries.

• Provision of management and

technical staff.

• Workshop on design training

and development

7. Alternative

livelihood

Provision of

alternative

livelihood for

30,000 displaced

workers of a

restructured wood

industry and chain

saw operators.

The project seeks to make displaced persons

less dependent on the forest as their main

source of livelihood. The project purpose is

to create sustainable employment for

displaced wood workers and chain saw

operators.

5 years 6.0

(1.0)

• Sustainable legal livelihood for displaced

workers.

• Timber resource conservation.

• Reduction in illegal chain saw logging

and chain saw activities.

• Normalisation of domestic and export

markets

• Identification and registration of

displaced people.

• Identification of types of

livelihood.

• Provision of tools, equipment

and resources.

• Monitoring and evaluation.

8. Involvement

of forest fringe

communities

Employment of

150 persons from

fringe

communities as

forest guards

The project seeks to employ people from

forest fringe communities as forest guards to

protect forest resources for improved

sustainable forest management. The project

purpose is to encourage community

participation in forest management.

5 years

2.0

(0.5)

• Rural poverty reduction.

• Improved protection of forest and timber

resources.

• Empowerment of communities in forest

management.

• Enhanced livelihoods in communities.

• Identification of forest reserves

to be protected.

• Identification of fringe

communities.

• Recruitment of forest guards.

• Awareness creation.

• Train and equip fringe

communities.

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9. Forestry

planning

Forest and NTFP

Inventory Project

(FIP)

There has been a non-judicious application of

forest and NTFP resources for over a decade.

This project will take stock of resources to

back future forest planning for multiple forest

benefits. The purpose of the project is to

know the extent of forest resources and

existing stock of timber trees, bamboo and

other NTFP.

3 years 5.0

( 1.0)

• Extent of NTFPs and existing stock of

timber resources.

• Rate of forest depletion

• Effective planning for raw material

supply

• Acquisition of vehicles and

equipment.

• Satellite imaging.

• Mapping and boundary

demarcation.

• Data evaluation

10. Marketing

and Trade

Market access of

LUS / LKS to EU

markets and

prohibition of

illegal timber for

GOG projects

To develop marketing stratergies for

promotion and marketing of LUS, LKS to EU

and other countries. The purpose is to bring

more revenue from LUS and LKS and

reduce pressure on traditional timber species.

3 years 2.5

(0.95)

• Expansion of species mix

• Reduced pressure on traditional premium

species.

• Enhanced sustainable forest management

• Improved level of skills and marketing.

• Stifles market for illegal timber

• Good governance on the domestic

market

• Liaise with FORIG to identify

species to be developed and

promoted.

• Develop products in

collaboration with private

manufacturers.

• Identify and build capacity of

procurement agencies of GOG

and public contractors on

responsible procurement.

Monitor and evaluate compliance

11. Capacity

building at

WITC

Upgrading

WITC’s training

capabilities and

general

infrastructure

This project will seek to improve WITC’s

operations research and training capabilities,

employ modern technological methods in

training and improve its institutional

efficiency. Purpose of the project is to keep

WITC one step ahead of industry in

training and equipment – an approach that

will impact upon the drive towards

improved efficiency in wood processing.

2 years 2.5

(0.45)

• Improved efficiency in industrial

technical training and livelihood

opportunities for workers in formal and

informal wood industry sub-sectors.

• Improvement in skills of workers.

• Improved quality technical assistance to

industry.

• Identification of equipment and

technical needs

• Purchase of equipment &

installation

• Identification of training needs

• Workshop and training

• Monitoring and evaluation

12. Capacity

building at

WITC

WITC Human

Resource

Development

This project seeks to improve the levels of

professional and semi-professional staff of

WITC necessary to deliver management level

services to the wood industry. It will provide

overseas technical assistance in technology

transfer, and training in management.

Purpose of the project is to keep WITC one

step ahead of industry in methods and

organization – an approach to impacting

upon the drive towards improved efficiency

in wood utilization.

3 years 1.0

(0.2)

• Improvement in quality control in the

wood processing industry.

• Technology transfer

• Needs analysis

• Employment of technical

assistants

• In service training. For staff

• Training of stakeholders

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13. Institutional

capacity building

Institutional

reform and

capacity building

for FC-HQ, TIDD

and FSD, RMSC

to undertake

regulatory roles

in the industry.

This project is intended to improve policy

analysis, planning and governance control

capabilities of MLFM, improve FC adherence

to its Service charter and reposition FSD and

TIDD to undertake regulatory roles in the

industry. The purpose of the project is to

improve forest governance

3 years 3

(0.5)

• Improved institutional efficiency,

reduced transaction costs of forest

stakeholders and improved confidence of

landowners.

• Improved monitoring and industry

development

• Procurement of equipment and

other logistics.

• Employment of timber industry

development specialist.

• Re-employment of forest guards.

• Training workshop with

collaborative partners including

Customs, CEPS.

14. Technical

Assistance for

RMSC on Forest

Regulation &

Management

RMSC will be required to manage the transfer

of knowledge from the FIP. It will need the

posting of forest engineering specialists and

equipment to help attain a newly required level

of capacity building to meet emerging

challenges. The purpose of the project is to

improve forest management.

2 years 1.0

(0.3)

• Correct estimation of forest depletion.

• Effective planning for future raw

material supply.

• Workshops & training

• Monitoring and evaluation

15. Trade

Associations

Trade Association

capacity building

This project seeks to position industry

associations to assume future challenging roles

in industry, trade and development through

their organizational restructuring, staffing and

provision of infrastructure. The purpose of

the project is to create accountable

associations complementing government’s

efforts at ensuring legality in forest

transactions

3 years 3.0

(0.35)

• Reduced economic cost to the state of

forest transactions,

• Established confidence among members

• Improved credibility of the wood

industry in overseas markets.

• Identify trading needs of the

associations

• Formation of secretariats

• Acquisition of infrastructural

needs

• Training in management and

administration.

• Provision of vehicles, office

equipment and services.

16. Ghana

Institute of

Professional

Foresters

Ghana Institute of

Foresters’(GIF)

capacity building

The project seeks to improve the capacity

building of the GIF to assume new roles

emerging from FC’s institutional reforms.

The purpose of the project is to enable the

GIF to support the VPA process through

monitoring and enforcement of private

sector compliance with forest standards.

3 years 1.0

-0.15

• Improved efficiency and transparency in

private sector forest conduct.

• Reduced industry transaction costs

• Capacity building of GIF

• Identification of personnel

• Identify role of GIF

• Workshop and training

(#) Note:

The size of investment is estimated on the basis of the following key assumptions:

A. Target medium term export turnover €600 mln p.a.

Assets-Turnover ratio: 2

B. Target medium term domestic turnover €250 mln p.a. (from 500,000m3 @ €500)

Assets-Turnover Ratio: 0.3 (Largely SMEs)

C Figures in brackets denote GOG counterpart funding

TIMBER INDUSTRY RESTRUCTURING GROUP - … Final DRAFT july2.pdf · TIMBER INDUSTRY RESTRUCTURING...

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